Investing in the future: BrightStar Wisconsin Foundation
Asking to invest in a nonprofit company
Founders of BrightStar Wisconsin Foundation, a nonprofit statewide venture philanthropy fund, came up with an innovative answer to the question of how to keep Wisconsin’s best and brightest here in the state to grow businesses. Their answer was to form a nonprofit company and accept tax-deductible contributions from donors instead of asking them to invest in what might otherwise be a high-risk venture.
Lorrie Keating Heinemann, vice president of BrightStar, says that since January 2014, the organization has invested more than $3.7 million into twenty-six companies that employ 175 full-time employees. She says those companies project that they will create an additional 1,479 jobs over the next three years.
“BrightStar’s model is fairly unique in that we try to put nearly one hundred percent of every dollar donated into companies,” says Heinemann, adding that the company is able to do so by capturing the qualified new business venture tax credit and monetizing it.
The inspiration for the fund stemmed from Wisconsin’s low 2013 ranking in startup activity as noted by the Kaufmann Foundation’s annual index. In 2015, the state ranked dead last, down from forty-fifth in 2014. The report’s analysis was based on three key measurements, which were startup activity, opportunity share and startup density.
Mark Burish, a BrightStar co-founder, says the fund partners with gener8tor, a startup incubator, to invest in companies that meet certain criteria and have potential to offer highly skilled jobs at good wages. He says BrightStar has also consulted with other angel investing groups to help companies with the potential of creating jobs in Wisconsin. Burish says his charity is “innovative” and has the possibility of “doing more good for society” in the long run.
What is social innovation?
According to Stanford University’s Social Innovation Review, social innovation is a “novel solution to a social problem that is more effective, efficient, sustainable or just than existing solutions” and benefits primarily society as a whole rather than private individuals.
It includes these elements:
Increasing employment, productivity and economic growth
Justice, fairness, environmental preservation, improved health, arts and culture and better education
A social innovation:
Can be a product, production process or technology (much like innovation in general), but it can also be a principle, an idea, a piece of legislation, a social movement, an intervention or some combination of them.
Recognizes the fundamental role of cross-sector dynamics: exchanging ideas and values, shifting roles and relationships and blending public, philanthropic and private resources. Innovation blossoms where the sectors converge.
Can’t be understood, let alone solved, without involving the nonprofit, public and private sectors.
The M List
Madison Magazine‘s M List is a who’s who of organizations and individuals who are having an impact on our local culture and economy. In its third year, the M List recognizes those making strides in the area of social innovation. Last year’s list of innovators were in the food industry. The original M List, in 2013, honored the technology sector. The 2014 M List honored “Foodtastic” entrepreneurs and innovators.